The term “NI Act” refers to the Negotiable Instruments Act, 1881, which is a law in India governing various negotiable instruments, including promissory notes, bills of exchange, and cheques. Cheque bounce cases typically fall under the purview of the NI Act.

When a cheque is dishonored or bounced due to insufficient funds or any other reason, it can lead to legal consequences for the issuer of the cheque. The payee of the bounced cheque can initiate legal proceedings under Section 138 of the Negotiable Instruments Act against the drawer (issuer) of the cheque.

Here’s a basic overview of the process involved in cheque bounce cases under the NI Act:

Issuing a Legal Notice: The payee must first issue a legal notice to the drawer of the bounced cheque within 30 days of receiving information from the bank regarding the dishonor of the cheque.

Payment Demand: The legal notice demands the payment of the amount mentioned in the bounced cheque within 15 days of receiving the notice.

Filing a Complaint: If the drawer fails to make the payment within the stipulated time after receiving the legal notice, the payee can file a criminal complaint under Section 138 of the NI Act. This complaint must be filed within one month from the expiry of the 15-day period mentioned in the legal notice.

Court Proceedings: Once the complaint is filed, the court will issue summons to the drawer. If the drawer fails to appear despite summons, the court can issue a warrant for their arrest. If the drawer is found guilty, they may face imprisonment for up to two years or a monetary penalty or both.

Compensation: In addition to the cheque amount, the court may order the drawer to pay compensation to the payee for the losses incurred due to the dishonor of the cheque.

It’s important to note that the process and penalties may vary slightly depending on the specific circumstances and the jurisdiction within India. Additionally, there may be legal defenses available to the drawer in certain situations, such as if the cheque was issued as a gift or if there was a genuine dispute regarding the underlying transaction.